In the past few weeks federal and provincial governments have rolled out well over $100-billion in new spending to keep the economy afloat until we can reach the other side of this pandemic. In normal times, these kind of programs might take years to develop, moving through consultations, internal deliberations, and carefully planned roll-outs. Now we measure in weeks, or even days.
The response of political leaders and public servants to design and implement programs deserves our respect and thanks. But the policy response needs to continue to be as broad and rapid as the crisis itself. Governments have demonstrated that they are listening, making changes in real time to policies as they are being rolled out. Advocates, experts and others outside of government can help by continuing to point out problems in government’s blind spots, and bringing in people and ideas that could solve them. even as we put out the fires, we need to be thinking for the medium and long-term so that we will be ready to rebuild.
A tribute to the humans making tough decisions
Political leaders, public servants, and delivery partners are showing remarkable creativity and flexibility. Policy ideas that were inconceivable mere weeks ago (like a broad-based 75% wage subsidy) are now conventional wisdom. Just as hockey equipment manufacturers are re-tooling to make face shields, the federal government has developed entirely new processes to handle the largest-ever surge of income support applications through brand new programs and pay benefits quickly.
We shouldn’t underestimate how difficult this task is. Shaping public policy in response to this crisis is like trying to assemble an Ikea cabinet without instructions on the back of a motorcycle on a bumpy road. There is no precedent — and the people who are doing it are regular humans, scared for their families, caring for children who are out of school.
Governments are moving more quickly than we ever thought possible because the public health response needed to save lives creates significant economic pain. If we don’t intervene quickly and effectively that pain will last longer and be felt deeper.
Bumps on the way
But this rapid pace has not come without its bumps. The constant dribble of new policy changes and revisions has left businesses and households in great deal of uncertainty. The gaps that remain mean that many people and businesses won’t qualify for assistance and could face financial ruin. The support we owe our leaders and public servants during this time is to work constructively with them to solve these challenges, not to stay silent on the sidelines.
Just as the next few weeks will be critical to flatten the curve to fight the spread of COVID and protect the capacity of our healthcare system and the safety of its workers, they are also critical for managing the economic impact of our nation-wide shutdown.
As rapid as the response has been so far, it may also be too slow to work for many that need it most. Applications are being processed this week for the Canada Emergency Response Benefit (CERB), with payments following in three to five business days — remarkably fast. On the other hand, the Canada Emergency Wage Subsidy (CEWS), the keystone support aimed at keeping businesses afloat, is not expected to be paid out for at least six weeks, and the details of eligibility are still being ironed out, especially for the non-profit sector.
That delay and the remaining uncertainty could be the death knell for small businesses that operate with minimal cash flow buffer. Half of businesses surveyed by the BC Chamber of Commerce question whether they will be able to re-open. The average cost of the shutdown to businesses surveyed by the CFIB is over $210,000 and climbing. While the CEWS is meant to keep workers and employers connected, layoffs are already coming fast and hard. If the point is to keep the economy intact as much as possible, we may be moving too slowly.
Policy gaps persist
We also need to move quickly to plug some major gaps in the policies to date.
- Beyond the wage subsidy, many small businesses with cratering revenue have fixed costs they cannot avoid. They need immediate direct help with their rent to make it to the other side of this shutdown. Some commercial landlords are offering this, but it’s on a case-by-case basis at their discretion.
- The Canada Emergency Response Benefit offers much more broad eligibility than EI or other government supports but it still leaves behind many that it is supposed to help. As of right now, if you earn any employment income, you are not eligible. That means a self-employed person who manages to earn 20% of their normal income while keeping their business alive cannot rely on the CERB to fill the gap. Students who are graduating or without summer work are also left out of this response. The government has now committed to addressing this, but the uncertainty will shape decisions.
- The proposed CEWS is a sledgehammer. It is big, blunt and packs a serious punch. But it has some significant blind . The subsidy is designed for employers who can show a 15% decline in revenue in March and a 30% decline for each of the following two months based on their “usual accounting practices.” While the government has made some adjustments to account for non-profits and high-growth businesses, it still fails to account for businesses that don’t see steady revenues month-to-month, for example with payment based on big projects rather than regular transactions, and uncertainty may be a barrier to take-up for small businesses.
- Municipal governments are seeing their revenues crater with property tax referrals, drops in user fees and more while they deliver essential services. Municipalities don’t have the same ability to raise revenues or take on debt as provincial and federal governments.
The longer we wait to address these gaps, the less effective our response will be. What governments have delivered so far would have seemed impossible a month ago. We need to do the impossible again.
The public policy community has to attend to its own blind spots
In normal times, policymakers rely on public consultation, parliamentary accountability and other kinds of external and internal feedback to get things right. These might fall short much of the time, but they are essential in making sure that public policy designed by a fairly insular group of “experts” fits with the reality of the people and industries touched by that policy.
In the service of moving quickly, we’ve effectively suspended most of those channels. Government is still getting some essential outside advice in private and in public, with constructive and creative ideas coming from across the country and political spectrum. But as Vass Bednar pointed out, this means that government only hears from a certain group of people with the means and platform to engage.
Even in times of crisis, there is a trade-off between efficiency and effectiveness. The less that people designing policies hear from the people that are affected, the more those policies will have critical gaps. Good ideas will be left on the table. The policy community has real blind spots towards the realities of how policies affect different parts of the population, and how policies shape business decisions. Part of this is that the public policy community draws heavily on a narrow educational, professional and socio-economic background, along with shortfalls on ethnic and racial diversity. But it is also a function of public policy career paths that too rarely provide exposure to other professional experiences.
The need for politics
More critically, the particular nature of this emergency means that elected politicians can’t all physically sit in their legislatures together. This has cut off the ability of Parliament and legislatures all across the country to play a role in representing Canadians and do their important work in holding governments to account. While this is a good time to put partisan interests aside, it is not a time to put politics aside — good politics are how our elected representatives make sure our interests are heard and reflected in the critical decisions that affect our lives and our community.
In Ottawa, the House of Commons is working to figure out how the House can meet its functions while maintaining the safety of physical distancing. At local, provincial and national levels we need our representatives at the table. Across Canada many local governments are already meeting remotely.
Thinking forward
The measures that governments have rolled out over the last few weeks are emergency life-saving measures for the economy. But when we get through this phase we still need to have a plan for a long, potentially painful period of rehabilitation.
There is plenty of uncertainty. We don’t know how long the COVID-19 pandemic will last and how many people will fall ill. We know even less about what the economic, social and geopolitical consequences will be.
We need to start planning for different scenarios so that we are ready. There is plenty of reason to believe that our economic context will look very different and that our public policy will need to as well. There are plenty of reasons why things in 2021 cannot and should not look the same as they did in 2019.
The old Rahm Emanuel quote that “a crisis is a terrible thing to waste” suggests a cynical play to use the pandemic as a launchpad to achieve political goals that would be difficult in normal times. But the crisis has also exposed deep shortcomings in the resilience of our economy and institutions, and the way that our systems overlook huge groups of people (such as caregivers and “gig workers” that don’t fit traditional employment patterns). Our governments and our other leaders need to think about the longer-term challenge of recovery at the same time that they respond to the current crisis.
A tribute to the people keeping things going
We also need to think about what we owe to the people on the front lines of this crisis who are physically, mentally and financially most in harm’s way. When the country mobilized for the Second World War, we recognized the debt that we owed to those who served. Beyond the financial support and programs for returning soldiers to rejoin the civilian economy, we also created new initiatives like the Canada Mortgage and Housing Corporation to respond to their need for affordable workforce housing.
Today across Canada while some of us stay home others are going to work to serve our communities in different ways. They include healthcare workers, farmers, manufacturing workers in critical industries, grocery workers and delivery workers. Many of these workers have little in the way of economic protection or insurance. A modest raise in “danger pay” over the period of the crisis doesn’t cut it. Most of them did not choose to be on the front lines, but that’s where they found themselves. We see now how much these often-under-paid positions prop our society up. When their jobs are no longer the official “essential services” of the crisis, we owe them to do better.
Noah Zon is the co-founder of Springboard Policy, a public policy research and advisory firm based in Toronto. He has spent his career in public policy in the non-profit sector, think tanks and public service.
Noah Zon is the co-founder of Springboard Policy, a public policy research and advisory firm based in Toronto. He has spent his career in public policy in the non-profit sector, think tanks and public service.
